Disclosure: Consolidated Water (NASDAQ:CWCO) is a special-situations, long-term play and should not be expected to have its value fully recognized for a few years.
Why Water?
As the world changes, so do investment opportunities along with it. What once was abundant and boring is suddenly the catalyst of wars. As investors, it is our duty to be constantly vigilant and willing to change our entire investing strategy if the need arises. I reached this moment of clarity when the price of oil first collapsed. As someone who mostly covered oil and natural gas exploration, I decided to become more opportunistic and stop looking for ideas that kept me living under a rock (first and last shale joke). This led me to come across information regarding the drastic changes our planet faces and may soon consider the new normal. The most startling figure I found was an estimate by the 2030 Water Resource Group, an organization quoted by the UN and other key research publications, that by 2030 the world will be facing a 40% global water deficit unless there is either a drastic increase in supply or a severe decrease in demand. Neither of these scenarios are likely to occur as the vast majority of the world’s water supply comes from rain reliant systems such as rivers, reservoirs, and groundwater systems. Population growth, on the other hand, has eliminated the possibility of any demand decrease. The once effortless and cheap water supply has been stretched to the breaking point forcing countries to consider alternatives.
An economical and underutilized alternative is water desalinization via a process called reverse osmosis. This process, costing a third of what it did in the 1990s, draws water from the ocean or brackish water systems and produces clean, safe drinking water. With a pristine balance sheet and recent
